GST is considered to be the India’s biggest indirect tax reform. It is a multi stage, destination based tax levied at each stage of value addition. The main agenda of the GST Bill is to implement a single tax structure right from the manufacturing stage till the goods or services are delivered to the final consumer. It is a single tax with full set-off for taxes paid in the earlier value chain. GST subsumes seventeen indirect taxes and twenty three cess. This tax reform would make doing business in the country tax neutral.
Why was GST established?
In order to make the earlier indirect tax regime operate in a transparent manner, GST was established. The main purpose for establishing GST was to remove the cascading effect of tax. Secondly, they intended to remove the indirect taxes levied by the Union and the State.
Benefits of GST
- Removal of Cascading Effect- GST implementation will ensure that cascading effect of taxation is removed. Input tax credit can be availed smoothly under this GST regime.
- Regulation of unorganized sector- There are certain industries in India which are still unorganized. The GST provisions will help to streamline the process of online compliances and payments and thereby help in regulation of unorganized sector.
- Uniform tax structure – It harmonizes the laws, procedures and tax rates across the country resulting in a simplified tax structure.
- Online Procedure under GST – The entire process under GST regime starting from registration to return filling is online. This would be quite advantageous for startup companies who do not have to opt for registration under various indirect tax regimes.
- Increase in Revenue – Since GST is replacing 17 indirect taxes with single tax , it will lead to increase in product demand which will simultaneously lead to increase in revenue for the Central and the State Government.